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UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


SCHOOL  OF  LAW 
LIBRARY 


SUPPLEMENT  TO  TREASURY   DECISIONS 

(T.  D.  2832) 


TREASURY   DEPARTMENT 

UNITED  STATES  INTERNAL  REVENUE 


U/S,      J*i*i«±l  #«-0«*ut-  3*fJ\KcA  . 


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REGULATIONS  47 

RELATING  TO  THE 

EXCISE  TAXES 

ON 

SALES    BY   THE 
MANUFACTURER 


UNDER    SECTION    900    OF    THE 
REVENUE  ACT  OF  1918 


WASHINGTON 

GOVERNMENT   PRINTING  OFFICE 

1919 


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Bo 

19  13 


£F 


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S  REGULATIONS 

RELATING    TO    THE 


EXCISE  TAXES  ON  SALES  BY  THE  MANUFACTURER 

UNDER 

Sccticn  £00  of  Title  IX  of  the  Revenue  Act  of  1918. 


CONTENTS. 

Tago. 

Section  900.  Imposition  of  tax 5 

Article  1.  Effective  date 5 

2.  Use  of  terms 5 

3.  Basis  of  tax 5 

4.  Discounts  and  expenses 5 

6.  Exchanges 0 

6.  Credit  for  taxes  already  paid 6 

7.  Who  is  a  manufacturer 6 

8.  Tax  payable  by  manufacturer 7 

9.  When  tax  attaches 7 

10.  Sales  to  the  Government  or  a  State 8 

Section  900  (1)  (2).  Automobiles 8 

Article  11.  Automobiles:  Scope  of  tax 8 

12.  Automobile  trucks  and  automobile  wagons 8 

13.  Other  automobiles  and  motorcycles 9 

Section  900  (3).  Automobile  parts  and  accessories 9 

Article  14.  Tires,  inner  tubes,  parts,  and  accessories  sold  to  manufacturer.  9 

15.  Definition  of  "  parts" 10 

16.  Definition  of  "accessories" 10 

Section  900  (4).  Musical  instruments 11 

Article  17.  Musical  instruments 11 

Section  900  (5).  Sporting  goods 12 

Article  18.  Sporting  goods 12 

Section  900  (6).  Chewing  gum 12 

Article  19.  Chewing  gum 12 

Section  900  (7).  Cameras 13 

Article  20.  Camera? 13 

Section  900  (8).  Films 13 

Article  21.  Photographic  films  and  plates 13 

Section  900  (9).  Candy 13 

Article  22.  Candy 13 

Section  900  (id).  Firearms 14 

Article  23.  Firearms,  shells,  ard  cartridges 14 

Section  900  (11)  (12).  Hunting  knivttS 14 

Article  24.   Hunting  knives,  dirk  knives,  daggers,  etc 14 

Section  900  (13).  Electric  fans 14, 

Article  25.  Portable  electric  fans 14 

3 


4  CONTENTS. 

Page. 

Section  900  (14).  Thermos  bottles 14 

Article  26.  Thermostatic  containers 14 

Section  900  (15).  Smokers'  articles 15 

Article  27.  Cigar  and  cigarette  holders,   pipes;  humidors,  and  smoking 

stands 15 

Section  900  (16).  Slot  machines 15 

Article  28.  Automatic  slot-device  machines 15 

Section  900  (17).  Liveries 15 

Article  29.  Liveries  and  livery  boots  and  hats 15 

Section  S00  (18).  Hunting  garments 15 

Article  30;  Hunting  and  shooting  garments  and  riding  habits..... 15 

Section  900  (19).  Fur  goods 16 

Article  31.  Fur  goods 16 

Section  900  (20).  Pleasure  boats 17 

Article  32.  Yachts  and  motor  boats 17 

Section  900  (21).  Toilet  soaps 17 

Article  38.  Toilet  soaps  and  toilet-soap  powders 17 

Section  900  Continued.  Manufacturer  also  retailer « 17 

Article  34.  Manufacturer  also  retailer 17 

Section  900  Continued.  Repeal  of  former  taxes . 18 

Article  35.  Repeal  of  former  taxes .-.I: 18 

Section  901.  Colorable  sales 18 

Article  36.  Colorable  sales. . .  .• 18 

Section  903.  Return  and  payment  of  tax 19 

Article  37.  Return  and  payment  of  tax 19 

Section  1304.  Trade  with  possessions  of  United  States 19 

Article  38.  Trade  with  possessions  of  United  States 19 

Section  1305.  Extension  of  existing  statutes 20 

Article  39.  Aids  to  collection  of  tax 20 

Section  1308.  Penalties 20 

Article  40.  Penalties . 21 

Section  1310  (a)  (b).  Credits  and  refunds 22 

Article  41.  Credits  and  refunds 22 

Section  1310  (c).  Exports 22 

Article  42.  Exemption  of  export  sale 22 

43.  Proof  of  exportation 23 

Section  1312.  Transfer  of  burden  of  tax 23 

Article  44.  Contract  of  sale  before  May  9,  1917 .'. 24 

45.  Contract  of  sale  before  September  3,  1918,  of  article  not  then 

taxable 24 

46.  Contract  of  sale  before  September  3,  1918  o|  article  then  tax- 

able    25 

47.  Return  of  tax 25 

48.  Meaning  of  "dealer".... 26 

Section  1313.  Fractional  part  of  cent 26 

Article  49.  When  fractional  part  of  cent  may  be  disregarded : 26 

Section  1314.  Medium  of  payment  of  tax 26 

Article  50.  Payment  of  tax  by  uncertified  checks 26 

51.  Procedure  with  respect  to  dishonored  checks 27 

Section  1319.  Misrepresentation  of  tax 27 

Article  52.  Misrepresentation  of  tax 27 

Section  1309.  Authority  for  regulations 27 

Article  53.  Promulgation  of  regulations 27 


EXCISE  TAXES  ON  SALES  BY  THE  MANUFACTURER. 

IMPOSITION  OF  TAX. 

Sec.  900.  That  there  shall  be  levied,  assessed,  collected,  and  paid  upon 
the  following  articles  sold  or  leased  by  the  manufacturer,  producer,  or  im- 
porter, a  tax  equivalent  to  the  following  percentages  of  the  price  for  which  so 
sold  or  leased— 

Article  1.  Effective  date. — The  tax  is  imposed  on  all  articles  sold 
or  leased  by  the  manufacturer,  producer,  or  importer  on  or  after  Feb- 
ruary 25,  1919,  even  though  manufactured,  produced,  or  imported 
before  that  date. 

Art.  2.  Use  of  terms. — In  these  regulations,  for  convenience,  unless 
obviously  inapplicable,  the  term  "manufacturer"  is  used  to  include 
also  "producer"  and  "importer";  the  term  "sale"  or  "sold"  to 
include  "lease"  or  "leased";  the  term  "purchaser"  to  include 
"lessee,"  and  the  term  "vendor"  to  include  "lessor."  The  term 
"person"  is  used  to  include  partnerships,  corporations,  and  associa- 
tions, as  well  as  individuals. 

Art.  3.  Basis  of  tax. — The  tax  is  on  the  sale  by  the  manufacturer 
of  the  taxable  article.  It  is  measured  by  the  price  for  which  the 
article  is  sold.  It  is  on  the  actual  sales  price  of  the  goods  sold,  and 
not  on  the  list  price,  where  that  differs  from  the  sales  price.  If  the 
price  of  a  taxable  article  is  increased  to  cover  the  tax,  the  tax  is  on 
such  increased  price.  Where,  however,  the  tax  is  billed  as  a  sepa- 
rate item  such  amount  need  not  be  included  in  the  -price  of  the 
article  in  computing  the  tax.  The  tax  is  payable  in  respect  to  a 
sale  made,  whether  or  not  the  purchase  price  is  actually  collected. 
(See  further  art.  G.) 

Art.  4.  Discounts  and  expenses. — A  discount  for  cash  or  other 
discount  made  subsequently  to  the  sale  can  not  be  deducted  in 
computing  the  price  for  the  purpose  of  the  tax.  Where,  however, 
articles  are  sold  over  a  period  of  time  under  an  agreement  for  a 
quantity  rebate,  the  tax,  if  originally  computed  on  the  gross  price, 
may  be  adjusted  in  the  return  for  the  month  in  which  the  price  is 
finally  determined.  Commissions  to  agents  and  other  expenses  of 
sale  are  not  deductible  from  the  price.  If  articles  are  sold  at  the 
factory  or  f.  o.  b.  cars  at  the  place  of  manufacture,  and  the  delivery 
charges  from  such  place  to  the  point  of  delivery  are  paid  by  the  pur- 
chaser as  a  specific  item,  or  if  they  are  sold  delivered  at  a  sum  less  de- 
livery charges  to  be  paid  by  the  purchaser,  such  charges  need  not  be 

5 


6  EXCISE   TAXES   ON   SALES   BY    MANl'l  ACTUUKR.  §900 

included  as  a  part  of  the  price  of  the  goods,  but  if  the  manufacturer 
sells  goods  at  a  delivered  price  and  he  himself  pays  the  delivery 
charges,  he  is  not  entitled  to  make  any  deduction  on  account  of  the 
inclusion  in  the  price  of  Mich  charges. 

Art.  5.  Exchanges.— If  articles  sold  are  returned  and  the  salo 
entirely  rescinded,  no  tax  is  payable,  and  if  paid  it  may  be  credited 
against  the  tax  included  in  a  subsequent  monthly  return.  See 
article  41.  If  a  part  only  of  the  articles  sold  at  one  time  is  re- 
turned, and  credit  or  rebate  allowed  by  the  vendor  therefor,  the  por- 
tion of  the  tax  to  be  credited  will  be  only  the  proportion  of  the  total 
tax  paid  which  the  amount  allowed  as  a  credit  or  rebate  bears  to 
the  total  sales  price  of  all  the  articles.  If  an  article  is  sold  under  a 
guarantee  as  to  its  quality  or  service  and  is  thereafter  returned  and 
a  rebate  math1  pursuant  to  the  guarantee,  the  vendor  may  claim  as 
a  credit  against  the  tax  included  in  a  subsequent  return  such  portion 
of  the  tax  originally  paid  in  respect  of  the  article  as  is  proportionate 
to  the  amount  of  the  price  refunded.  If  an  article  is  sold  and  there- 
after, before  use.  exchanged  for  another  article  of  a  higher  price,  the 
purchaser  paying  the  difference,  the  vendor  should  pay  the  tax  on 
the  second  sale,  but  may  take  as  a  credit  against  such  tax  such  part 
of  the  tax  paid  on  the  returned  article,  which  the  amount  allowed 
as  a  credit  for  the  return  of  such  article  on  the  second  sale  bears 
to  the  amount  of  the  purchase  price  in  the  case  of  the  first  sale. 

Art.  6.  Credit  for  taxes  already  paid. — A  manufacturer  may  take 
as  a  credit  against  the  tax  imposed  on  him  in  respect  to  the  sale  of 
any  article  taxable  under  section  900  an  amount  equal  to  any  tax 
imposed  under  section  900  which  he  has  reimbursed  to  the  vendor 
from  whom  he  purchased  any  article  forming  a  component  part 
(whether  or  not  changed  in  form  b}''  process  of  manufacture)  of  the 
article  sold  by  him  and  in  respect  to  which  tax  is  paid  by  him.  No 
credit  is  allowable,  however,  for  any  tax  so  reimbursed  by  a  manu- 
facturer to  the  vendor  in  respect  to  any  article,  unless  such  article 
forms  a  component  part  of  an  article  sold  by  such  manufacturer  and 
in  respect  to  which  a  tax  is  payable  by  him.  This  credit  will  be 
allowed  only  if  the  taxpayer  keeps  such  records  and  evidence  as  will 
clearly  establish  his  right  to  the  exemption.  In  cases  of  doubt,  in 
order  to  avoid  penalty  for  default  if  the  claim  is  not  established, 
the  tax  should  be  paid  in  full  and  application  made  for  refund. 

Art.  7.  Who  is  a  manufacturer — (a)  A  manufacturer  is  a  person 
who  prepares  a  taxable  article  in  marketable  form.  There  are 
several  cases,  however,  in  which  under  section  900  there  may  be 
several  manufacturers,  each  of  whom  must  pay  a  tax,  as,  for  ex- 
ample, the  tax  upon  "articles  made  of  fur."  In  such  case  the  tax 
may  attach  on  successive  sales,  if  there  are  several  stages  of  manu- 
facture.    See,  however,  article  6  as  to  credits  in  such  cases. 


{900  EXCISE   TAXES   ON  SALES  BY  MANUFACTURER.  7 

(b)  Where  baseball  bats  or  other  sporting  goods  taxable  under 
subdivision  (5)  of  section  900,  or  pianos  taxable  under  subdivision 
(4)  of  section  900,  are  prepared  in  marketable  form  by  A,  who  marks 
or  labels  them  only  with  the  name  or  trade-mark  of  B,  who,  on  their 
being  delivered  to  him,  sells  them  without  further  manufacture  to 
his  own  customers,  if  the  transaction  between  A  and  B  is  an  actual 
sale  of  the  articles  and  not  merely  the  employment  of  A  by  B  to  manu- 
facture them  as  his  agent  at  a  specified  profit,  A  is  the  "manufac- 
turer" who  is  liable  for  the  tax. 

(c)  A  person  who  is  employed  to  make  an  article  and  receives  for 
it  the  cost  of  materials  and  labor,  plus  a  specified  profit,  shall  be  con- 
sidered a  manufacturing  agent,  and  the  person  who  procures  the 
preparation  of  the  article  for  purposes  of  resale  will  be  considered 
the  manufacturer. 

Art.  8.  Tax  payable  by  the  manufacturer. — The  tax  is  to  be  paid 
by  the  manufacturer  on  all  sales  made  directly  by  him  or  through  an 
agent.  If  the  manufacturer  has  a  sales  agent  or  sales  agency  to 
whom  he  only  nominally  sells  an  article,  but  retains  an  interest  in 
the  profits  from  the  resale  of  the  article,  the  taxable  sale  is  that  made 
by  the  sales  agent  or  sales  agency.  On  articles  manufactured  for  a 
jobber  by  a  foreign  manufacturer,  the  jobber  must  pay  the  tax  as 
the  importer.  A  receiver  or  trustee  in  bankruptcy  of  a  manufac- 
turer conducting  a  business  under  court  order  is  liable  to  the  tax 
upon  articles  sold  by  him.  Where  a  manufacturer  consigns  arti- 
cles to  a  retailer,  retaining  ownership  in  them  until  they  are  dis- 
posed of  by  the  retailer,  the  manufacturer  must  pay  the  tax  based 
upon  the  price  for  which  sold  by  the  retailer.      See  article  34. 

Art.  9.  When  tax  attaches. — The  tax  attaches  when  the  article 
is  sold;  that  is  to  say,  when  the  title  to  it  passes  from  the  vendor 
to  the  purchaser  pursuant  to  a  previous  contract  of  sale  or  upon 
a  sale  without  previous  contract.  When  title  passes  is  a  question 
of  fact  dependent  upon  the  intention  of  the  parties  as  gathered 
from  the  contract  of  sale  and  the  attendant  circumstances.  Where 
goods  are  segregated  from  other  goods  owned  by  the  vendor  and  it 
is  the  intention  of  both  the  vendor  and  the  purchaser  at  the  time 
the  goods  are  segregated  that  they,  shall  then  belong  to  the  pur- 
chaser, the  title  will  be  presumed  to  pass  at  such  time.  In  the 
absence  of  an  intention  to  the  contrary  the  title  is  presumed  to  puss 
upon  delivery  of  the  article  to  the  purchaser  or  to  a  carrier  for  the 
purchaser.  In  the  case  of  a  conditional  sale,  where  the  title  is  re- 
served in  the  vendor  until  payment  of  the  purchase  price  in  full, 
the  tax  attaches  (a)  upon  such  payment,  or  (b)  when  title  passes  if 
before  completion  of  the  payments,  or  (c)  when,  before  completion 
of  the  payments,  the  dealer  disposes  of  the  salfc  by  charging  off,  by 
any  method  of  accounting  he  may  adopt,  the  unpaid  portion  of  the 
contract  price. 


8  EXCISE  TAXES  ON  SALES  BY  MANUFACTURER.  §  900 

Art.  10.  Sales  to  the  Government  or  a  State. — The  tax  applies  to 
articles  enumerated  in  section  900  when  sold  to  the  Government. 
Where,  however,  the  Government  supplies  a  manufacturer  with  all 
materials  and  parts  except  a  small  portion  furnished  by  the  manu- 
facturer, under  a  contract  stipulating  that  the  manufacturer  shall  be 
guaranteed  a  certain  profit,  no  tax  is  payable,  because  the  manu- 
facturer dot's  not  sell  the  articles.  Articles  manufactured  in  plants 
taken  over  and  operated  by  the  Government  are  not  subject  to  the 
tax.  Articles  sold  to  a  State  or  a  political  subdivision  thereof  by 
the  manufacturer  for  use  in  carrying  on  its  governmental  operations 
are  not  subject  to  the  tax.  Articles  sold  by  the  manufacturer  to  a 
State,  county,  or  municipal  institution  are  also  exempt  from  tax 
when  paid  for  entirely  out  of  public  money. 

AUTOMOBILES. 

(h  Automobile  trucks  and  automobile  wagons,  (including  t,ires,  inner 
tubes,  parts,  and  accessories  therefor,  sold  on  or  in  connection  therewith  or 
with  the  sale  thereof),  3  per  centum; 

ii'  Other  automobiles  and  motorcycles,  (including  tires, '  inner  tubes, 
parts,  and  accessories  therefor,  sold  on  or  in  connection  therewith  or  with  the 
sale  thereof),  except  tractors,  5  per  centum;    *    *    * 

Art.  11.  Automobiles:  Scope  of  tax. — An  automobile  (as  well  as 
an  automobile  truck  or  automobile  wagon)  is  a  self-propelling  vehicle 
designed  primarily  for  the  transportation  in  or  upon  it  of  persons  or 
property.  Motor-driven  machines  for  pulling  a  vehicle  around  fac- 
tories and  railway  stations  and  motor-driven  machine  gun  carriages 
are  not  taxable.  An  automobile  hearse  and  a  pallbearers'  coach  are 
taxable  under  subdivision  2.  A  self-propelled  fire  engine,  at  least 
if  designed  to  carry  only  such  persons  as  are  necessary  to  drive  it,  is 
not  taxable.  If,  however,  it  is  especially  designed  to  carry  firemen 
not  employed  in  or  about  the  driving  of  the  machine,  it  is  taxable  as 
an  automobile.  Automobile  trucks  ecmipped  as  hook  and  ladder 
trucks,  and  hose  carts  for  the  use  of  firemen,  are  likewise  taxable. 
A  usable  substantially  completed  automobile  or  automobile  truck 
produced  by  assembling  new  parts  of  trucks  or  cars  is  subject  to 
tax,  but  a  rebuilt  car  is  not  subject  to  tax  as  sucr^  although  the  new 
parts  thereof  are  subject  to  tax  when  sold  by  the.  manufacturer,  even 
though  assembled  into  a  car.  Automobiles  which  have  been  sold  by 
the  manufacturer  are  not  taxable  when  sold  again.  Where,  however, 
a  manufacturer  sells  again  an  automobile  which  he  has  once  sold  and 
which  has  been  returned  to  him  and  the  first  sale  rescinded,  the  tax 
attaches  on  the  second  sale.     A  tractor  is  not  taxable. 

Art.  12.  Automobile  trucks  and  automobile  wagons. — The  tax  is  3 
per  cent  of  the  price,  for  which  automobile  trucks  and  automobile 


§900  EXCISE   TAXES   ON   SALES  BY   MANUFACTURER.  9 

wagons  are  sold  by  the  manufacturer.  An  automobile  truck  or 
automobile  wagon  is  a  self-propelling  vehicle  primarily  designed  or 
adapted  for  the  transportation  of  property.  The  act  specifically 
exempts  tractors;  even  if  sold  in  combination  with  a  trailer.  Any 
tires,  inner  tubes,  parts  or  accessories  for  automobile  trucks  and 
automobile  wagons  sold  on  or  in  connection  therewith  or  with  the 
sale  thereof  are  taxable  at  3  per  cent.  Such  tires,  inner  tubes,  parts 
and  accessories,  however,  as  (although  sold  on  or  in  connection  with 
an  automobile  truck  or  automobile  wagon  or  with  the  sale  thereof) 
are  in  excess  of  the  quantities  usually  sold  in  the  ordinary  course  of 
trade  to  a  single  customer  at  the  time  of  the  purchase  of  an  automo- 
bile truck  or  wagon,  will  not  be  taxable  at  3  per  cent,  but  will  be  tax- 
able under  subdivision  (3)  of  section  900  at  the  rate  of  5  per  cent. 
Art.  13.  Other  automobiles  and  motorcycles. — The  tax  is  5  per  cent 
of  the  price  for  which  such  articles  are  sold  by  the  manufacturer. 
It  applies  to  all  automobiles  primarily  designed  for  carrying  persons, 
including  passenger  cars,  taxicabs,  auto-busses,  sight-seeing  cars,  and 
also  to  all  motorcycles,  including  side  cars.  Where  an  automobile 
chassis,  although  of  such  construction  as  is  ordinarily  used  in  auto- 
mobile trucks,  is  fitted  with  a  body  designed  for  the  carriage  of  per- 
sons, or  for  the  carriage  of  persons  and  property,  the  completed  whole 
is  taxable  at  5  per  cent  of  the  price  for  which  sold  by  the  manufac- 
turer, and  not  under  subdivision  (1)  at  3  per  cent.  Tires,  tubes, 
parts,  and  accessories  for  motorcycles  or  automobiles  other  than 
automobile  trucks,  or  automobile  wagons  sold  on  or  in  connection 
therewith  or  with  the  sale  thereof  are  taxable  at  5  per  cent. 

AUTOMOBILE  PARTS  AND  ACCESSORIES. 

(3)  Tires,  inner  tubes,  parts,  or  accessories,  for  any  of  the  articles  enum- 
erated in  subdivision  (1)  or  (2),  sold  to  any  person  other  than  a  manufacturer 
or  producer  of  any  of  the  articles  enumerated  in  subdivision  (1)  or  (2),  5  per 
centum; '  *    *    * 

Art.  14.  Tires,  inner  tubes,  parts,  and  accessories  sold  to  manu- 
facturer.— Subdivision  (3)  of  section  900  of  the  act  provides  (hat 
tires,  inner  tubes,  parts,  or  accessories  shall  be  exempt  from  the  tax 
if  sold  to  a  manufacturer  or  producer  of  automobile  trucks,  auto- 
mobile wagons,  other  automobiles,  or  motorcycles.  To  come  within 
this  exemption  the  sale  must  be  to  such  a  manufacturer  for  use  by 
him  in  the  manufacture  or  production  of  new  cars  or  for  free  replace- 
ment under  contract  of  guaranty.  If  sold  to  such  a  manufacturer 
for  any  other  purpose,  such  as  resale  to  a  dealer  or  for  the  rebuilding 
of  used  cars,  the  sale  is  taxable.  In  order  for  the  sale  to  come  within 
the  exemption  of  the  statute,  the  manufacturer  must  at  the  time  the 
goods  are  shipped  or  sold  (whichever  is  prior)  have  in  his  possession 
113487°— 19 2 


10  EXCISE   TAXES  ON   SALES   BY   MANUFACTURER.  §900 

an  order  or  contract  of  sale,  with  certificate  of  the  purchaser  in 
writing  printed  thereon  or  permanently  attached  thereto,  showing 
that  tho  tires,  inner  tubes,  parts,  or  accessories  so  purchased  are 
to  be  used  in  the  manufacture  or  production  of  new  cars  or  for  free 
replacement  under  contract  or  guaranty:  If  in  any  case  such  an 
order  and  certificate  can  not  be  produced  on  demand  of  any  author- 
ized agent  of  the  department  tho  tax  in  respect  to  the  sale  will  be 
considered  in  default. 

Art.  15.  Definition  of  parts.  -A  "part"  for  an  automobile  truck, 
automobile  wagon,  other  automobile,  or  motorcycle  is  any  article 
designed  or  manufactured  for  the  special  purpose  of  being  used 
as  or  to  replace  a  component  part  of  any  such  vehicle,  and  which 
by  reason  of  some  peculiar  characteristic  is  not  such  a  commercial 
commodity  as  would  ordinarily  be  sold  for  general  use,  and  which 
is  primarily  adaptable  only  for  use  as  a  component  part  of  such 
vehicle.  Mere  stock  or  commercial  commodities  such  as  bolts,  nuts, 
washors,  screws,  though  used  as  components  for  such  vehicles,  are  not 
"parts"  within  the  meaning  of  subsection  (3)  of  section  900.  Arti- 
cles, however,  which  ordinarily  would  be  classed  as  commercial 
commodities  become  parts  when,  because  of  their  design  or  construc- 
tion, they  are  primarily  adaptable  for  use  as  component  parts  of  such 
vehicles.  Component  parts  of  articles  taxable  under  this  definition 
are  taxable  when  sold  separately,  if  they  have  reached  such  stage  of 
manufacture  that  they  are  primarily  adaptable  for  use  as  such  a 
component  part.  Thus  plates,  jars,  and  separators  for  automobile 
storage  batteries  are  taxable  when  sold  separately.  A  chassis  is  a 
part  of  an  automobile  and  taxable  at  the  rate  of  5  per  cent  when 
sold  separately  regardless  of  whether  it  is  a  chassis  for  an  automobile 
truck  or  wagon,  or  for  any  other  kind  of  automobile.  An  auto- 
mobile body  is  also  a  part  of  an  automobile. 

Art.  16.  Definition  of  accessories.  An  "accessory"  for  an  auto- 
mobile truck,  automobile  wagon,  other  automobile,  or  motorcycle  is 
any  article  designed  to  be  attached  to  or  used  in  connection  with 
such  vehicle  to  add  to  its  utility,  and  which  is  primarily  adaptable  for 
use  in  connection  with  such  vehicle,  whether  or  not  essential  to  its 
operation.  The  term  "accessories"  includes,  for  example,  horns, 
speedometers,  self-starters,  spot-lights,  shock  absorbers,  tire  pumps, 
pressure  gauges,  and  hydrometers.  All  such  articles  primarily 
adapted  for  use  in  connection  with  an  automobile  are  subject  to  the 
tax  even  though  they  may  sometimes  be  used  otherwise,  as,  for 
example,  with  motor  boats.  If  any  doubt,  reasonable  and  bona 
fide,  exists  as  to  the  special  adaptability  of  an  article  the  fact  of  its 
sale  by  the  manufacturer  to  be  used  with  an  automobile  or  to  an 
automobile    accessories    dealer    will    determine    its    taxability.     A 


§900  EXCISE   TAXES   02T  SALES  BY  MANUFACTURER.  11 

wrench  or  other  tool  of  a  kind  sold  in  hardware  stores  for  general 
purposes  is  not  subject  to  the  tax,  but  a  wrench  or  other  tool  of 
special  design  or  construction  primarily  adapted  to  be  used  in  con- 
nection with  automobiles  will  be  subject  to  the  tax.  Robes,  goggles, 
and  lunch  kits  are  not  subject  to  the  tax.  Automobile  trailers, 
regardless  of  the  number  of  wheels  which  they  may  have,  are  not 
parts  of  or  accessories  for  automobiles;  but  rear  portions  of  automo- 
bile trucks,  automobile  wagons,  or  other  automobiles,  not  properly 
called  trailers,  are  taxable  as  a  part  of  the  automobile.  Where 
a  manufacturer  sells  automobile  accessories  or  parts  to  a  jobber 
who  in  turn  sells  them  to  a  manufacturer  of  completed  cars  the 
tax  upon  the  accessories  or  parts  is  payable  by  the  manufacturer 
who  sells  them  to  the  jobber.  Where  a  manufacturer  sells  material 
to  an  accessories  manufacturer  who  in  turn  sells  the  accessories 
constructed  from  them  to  a  manufacturer  of  completed  automobile 
trucks,  automobile  wagons,  other  automobiles,  or  motorcycles, 
except  tractors,  the  manufacturer  of  the  completed  vehicle  is  liable 
for  the  tax  upon  his  sales  and  no  tax  is  due  upon  such  previous  sales. 

MUSICAL  INSTRUMENTS. 

(4)  Pianos,  organs  (other  than  pipe  organs),  piano  players,  graphophones, 
phonographs,  talking  machines,  music  boxes,  and  records  used  in  connection 
with  any  musical  instrument,  piano  player,  graphophone,  phonograph,  or 
talking  machine,  5  per  centum;     *    *    * 

Art.  17.  Musical  instruments. — The  tax  is  5  per  cent  on  the  price 
for  which  the  articles  enumerated  are  sold  by  the  manufacturer. 
Player  pianos  are  pianos.  Where  a  person  other  than  a  manufac- 
turer of  the,  player  action  completes  the  player  piano  by  installing  the 
action  in  a  piano,  the  tax  must  be  paid  on  the  selling  price  of  the 
complete  player  piano.  Conversely,  where  the  manufacturer  of  the 
player  action  purchases  pianos  and  turns  out  a  complete  player 
piano,  he  must  pay  the  tax  on  the  selling  price  of  the  player  piano. 
Accessories  and  parts,  other  than  records,  for  the  articles  enumer- 
ated, are  not  taxable  unless  sold  in  combination  therewith.  Toy 
talking  machines  arc  taxable,  but  dictagraphs  and  dictaphones  are 
not  subject  to  the  tax. 


12  EXCISE  TAXES  ON   SALES  BY   MANUFACTURER.  §900 

SPORTING  GOODS. 

(5)  Tenuis  rackets,  nets,  racket  covers  find  presses,  skates,  snowshoes,  skis, 
toboggans;  canoe  paddles  and  cushions,  polo  mallets,  baseball  bats,  gloves, 
masks,  prot ect  lis,  shoes  and  uniforms,  football  helmets,  harness  and  goals, 
basket-ball  goals  and  uniforms,  golf  bags  and  clubs,  lacrosse  sticks,  balls  of 
all  kinds,  including  baseballs,  footballs,  tennis,  golf,  lacrosse,  billiard  and 
pool  balls,  fishing  rods  and  reels,  billiard  and  pool  tables,  chess  and  checker 
boards  and  pieces,  dice,  games  and  parts  of  games  (except  playing  cards  and 
children's  toys  and  games),  and  all  similar  articles  commonly  or  commer- 
cially known  as  spoiling  goods,  10  per  centum;     *     *     *  , 

Art.  IS.  Sporting-  goods. — The  tax  is  10  per  cent  of  the  price  for 
which  the  articles  enumerated  are  sold  by  the  manufacturer.  The 
words  "similar  articles  commonly  or  commercially  known  as  sporting 
goods,"  include  all  articles  which  bear  a  like  or  similar  relation  to  any 
game  or  sport  which  the  articles  enumerated  bear  to  the  game  or 
sport  in  which  they  are  employed;  thus,  articles  which  are  used  as 
implements  of  a  game  or  sport  (such  as  bowling  alley  tenpins),  pro- 
tectors of  any  type  (such  as  shinguards),  receptacles  for  carrying 
implements  of  a  game  or  sport  (such  as  bat  bags),  goals,  etc.,  are 
taxable.  If,  however,  such  articles  are  commonly  sold  for  other  pur- 
poses than  to  be  used  in  a  game  or  sport,  they  are  not  taxable;  thus, 
baseball  shoes  are  taxable,  but  ordinary  rubber  soled  canvas  or  rubber 
shoes,  although  used  for  playing  tennis,  are  not  taxable.  Articles  of 
clothing  specially  adapted  for  use  in  the  playing  of  a  game  or  sport 
are  taxable,  unless  they  are  commonly  sold  for  general  use.  Thus, 
baseball,  football,  and  basketball  trousers  and  shoes  are  taxable,  but 
jerseys  and  sweaters  are  not  taxable  unless  specially  made  or  deco- 
rated in  such  manner  as  to  identify  them  as  a  part  of  a  uniform. 
Gymnasium  and  playground  apparatus  are  not  taxable.  The  act 
taxes  games  and  parts  of  games.  The  act  exempts  children's  toys 
and  games,  but  card  games  to  be  played  by  adults,  as  well  as  chil- 
dren, other  than  ordinary  playing  cards,  are  subject  to  the  tax. 

CHEWING  GUM. 

(6)  Chewing  gum  or  substitutes  therefor,  3  per  centum;     *    *    * 

Art.  19.  Chewiug  gum. — The  tax  is  3  per  cqnt  of  the  price  for 
which  chewing  gum  or  any  substitute  therefor  is  sold  by  the  manu- 
facturer. Substitutes  include  any  imitation  designed  to  take  the 
place  of  chewing  gum.  Where  chewing  gum  is  covered  with  another 
substance,  the  tax  is  on  the  whole  article.  Chewing  gum  with  candy 
coating  will  be  taxable  as  chewing  gum  and  not  as  candy. 


900  EXCISE   TAXES   ON   SALES   BY   MANUFACTURER.  13 

CAMERAS. 

(7)  Cameras,  weighing  not  more  than  one  hundred  pounds,  10  per  centum; 
#    #    * 

Art.  20.  Cameras. — The  tax  is  10  per  cent  of  the  price  for  which 
cameras  weighing  not  more  than  100  pounds  are  sold  by  the  manu- 
facturer. Stands  and  tripods  are  not  to  be  weighed  in  computing 
the  weight  of  the  camera.  Process  and  motion-picture  cameras  are 
subject  to  the  tax.  Toy  cameras  are  taxable  if  capable  of  taking  a 
picture.  Parts  of  cameras  are  not  taxable,  unless  sold  in  combina- 
tion with  a  camera. 

FILMS. 

(8)  Photographic  films  and  plates,  other  than  moving-picture  films,  5  per 
centum;     *    *    * 

Art.  21.  Photographic  films  and  plates. — The  tax  is  5  per  cent  of 
the  manufacturer's  selling  price  of  photographic  films  and  plates,  other 
than  moving-picture  films.  For  the  purposes  of  the  act,  X-ray  plates 
are  deemed  to  be  photographic  plates. 

CANDY. 

(9)  Candy,  5  per  centum;     *    *    * 

Art.  22.  Candy. — Candy  within  the  meaning  of  the  act  includes 
chocolate  creams,  bonbons,  gum  drops,  jelly  drops,  jelly  beans, 
imperials,  caramels,  stick  candy,  lozenges,  taffies,  candy  kisses,  wafers, 
fudges  or  Italian  creams,  nougats,  peanut  brittle,  sugared  almonds, 
chocolate  covered  fruits  and  nuts,  glace  or  candied  fruits  and  nuts, 
popcorn  and  other  cereals  or  cereal  products  mixed  with  or  covered 
with  molasses,  sugar  or  other  sweetening  agent,  hard  candies,  plain 
and  chocolate  covered  marshmallows,  candy  cough  drops  and  sweet- 
ened licorice  not  taxed  as  cough  drops,  sweet  chocolate  and  sweet 
milk  chocolate  whether  plain  or  mixed  with  fruits  or  nuts;  and  all 
similar  articles  however  designated.  It  does  not  include,  however, 
cereal  breakfast  foods,  cake  and  pastries,  nor  bitter  chocolate  which 
needs  the  addition  of  sugar  before  it  becomes  pleasing  to  the  taste. 
If  a  manufacturer  of  glace  or  candied  fruits  at  the  time  the  goods  are 
shipped  or  sold  (whichever  is  prior)  has  in  his  possession  an  order  or 
contract  of  sale  with  certificate  of  the  purchaser  printed  thereon  or  in 
writing  and  permanently  attached  thereto,  showing  that  such  fruits  so 
purchased  are  to  be  used  in  the  manufacture  of  food  products,  such 
as  ice  cream,  cakes,  and  pastries,  the  sale  thereof  shall  not  be  taxable. 
Where  a  manufacturer  of  candy  sells  in  connection  with  the  sale  of 
his  own  product  candy  which  he  has  bought  from  another  manufac- 
turer and  on  which  he  has  performed  no  further  process  of  manufac- 
ture the  tax  attaches  only  to  such  portion  of  the  goods  sold  as  havo 
been  manufactured  by  him. 


14  EXCISE   TAXES   ON  SALES  BY   MANUFACTURER.  §900 

FIREARMS. 

(10)  Firearms,  shells,  and  cartridges,  except  those  sold  for  the  use  of  the 
United  States,  any  State,  Territory,  or  possession  of  the  United  States,  any 
political  subdivision  thereof,  the  District  of  Columbia,  or  any  foreign  country 
while  engaged  against  the  German  Government  in  the  present  war,  10  per 
centum;    *    *    * 

Art.  23.  Firearms,  shells,  and  cartridges. — A  firearm  is  any  weapon 
from  which  shol  is  discharged  by  an  explosive.  For  the  purpose  of 
the  act,  firearms  include  only  portable  firearms,  as  pistols,  revolvers, 
rifles,  carbines,  machine  guns,  shotguns,  and  fowling  pieces.  Shells 
and  cartridges  include  projectiles  for  all  such  portable  arms. 

KNIVES. 

(11 )  Hunting  and  bowie  knives,  10  per  centum  ; 

(12)  Dirk  knives,  daggers,  sword  canes,  stilettos,  and  brass  or  metallic 
knuckles,  100  per  centum;     *     *     * 

Art.  24.  Hunting  knives,  dirk  knives,  daggers,  etc. — A  hunting  or 
bowie  knife  is  a  knife  with  a  blade  over  3  inches  in  length,  having  a 
sharp  point  and  one  cutting  edge,  especially  adapted  for  sticking, 
skinning,  and  cutting  game.  The  knife  may  be  of  a  rigid  type,  car- 
ried in  a  sheath,  or  it  may  be  of  a  clasp  type,  containing  devices 
other  than  the  blades.  Hunting  and  bowie  knives  aro  subject  to  a 
tax  of  10  per  cent  of  the  manufacturer's  selling  price,  whereas  the 
weapons  described  in  (12)  are  subject  to  a  tax  of  100  per  cent  upon 
the  price  for  which  sold  by  manufacturers. 

ELECTRIC  FANS. 

(13)  Portable  electric- fans,  5  per  centum;     *     *     * 

Art.  25.  Portable  electric  fans. — The  ordinary  movable  electric 
fan,  oscillating  or  nonoscillating,  constructed  with  a  heavy  base  and 
receiving  its  current  through  a  flexible  cable,  so  that  it  can  be 
readily  moved  from  place  to  place  is  subject  to  the  tax.  So, 
also,  fans  of  a  like  type,  screwed  to  a  wall,  bracket,  or  other  sup- 
port, but  capable  of  being  easily  moved,  are  taxable.  Ceiling  fans, 
exhaust  fans,  and  blowers  which  are  permanently  attached,  and 
which  require  separate  wires  and  switches  and  skilled  workmen  to 
install  or  remove  them,  are  not  portable  fans  within  the  meaning  of 

the  act. 

THERMOS  BOTTLES. 

(14)  Thermos  and  thermostatic  bottles,  carafes,  jugs,  or  other  thermostatic 
containers,  5  per  centum ;     *    *    * 

Art.  26.  Thermostatic  containers. — The  tax  is  5  per  cent  of  the 
manufacturer's  selling  price  of  the  enumerated  articles.  The  tax 
attaches  only  to  the  sale  of  containers  using  the  vacuum  principle  of 
heat  or  cold  retention.     Thus,  tireless  cookers  are  not  taxable. 


§900  EXCISE   TAXES   ON   SALES  BY   MANUFACTURER.  15 

SMOKERS'  ARTICLES. 

(15)  Cigar  or  cigarette  holders  and  pipes,  composed  wholly  or  in  part  O? 
meerschaum  or  amber,  humidors,  and  smoking  stands,  10  per  centum;     *    *     * 

Art.  27.  Cigar  and  cigarette  holders,  pipes,  humidors,  and  smoking 
stands. — For  the  purpose  of  the  tax  a  humidor  means  either  (a)  a 
device  for  maintaining  moist  atmosphere  in  any  receptacle  used  for 
holding  tobacco  products,  or  (b)  a  portable  receptacle  used  for  holding 
tobacco  products  and  fitted  with  a  device  for  maintaining  moist 
atmosphere  therein.  A  smoking  stand  means  (a)  a  tobacco  ash  tray, 
having  a  pedestal  and  base,  or  (b)  two  or  more  tobacco  ash  trays 
supported  in  an  upright  position  from  a  common  base  and  designed 
to  be  placed  on  a  table,  desk,  floor,  or  other  surface. 

SLOT  MACHINES. 

(16)  Automatic  slot-device  vending  machines,  5  per  centum,  and  automatic, 
Blot-device  weighing  machines,  10  per  centum;  if  the  manufacturer,  producer, 
or  importer  of  any  such  machine  operates  it  for  profit,  he  shall  pay  a  tax  in 
respect  to  each  such  machine  put  into  operation  equivalent  to  5  per  centum 
of  its  fair  market  value  in  the  case  of  a  vending  machine,  and  10  per  centum 
of  its  fair  market  value  in  the  case  of  a  weighing  machine;     *    *    * 

Art.  28.  Automatic  slot-device  machines. — A  machine  used  for 
both  vending  and  weighing  is  taxable  as  a  weighing  machine.  For 
the  purpose  of  the  tax  fair  market  value  is  deemed  to  be  the  average 
wholesale  price  at  which  like  machines  have  been  sold  by  the  manu- 
facturer at  wholesale  during  the  month  next  preceding  the  month  in 
which  such  machine  is  put  into  operation.  In  case  there  has  been  no 
prior  sale  of  such  machines,  fair  market  value  is  deemed  to  be  the 
average  wholesale  price  for  which  similar  machines  are  sold  at  the 
time  the  taxable  machine  is  put  into  operation. 

LIVERIES. 

(17)  Liveries  and  livery  boots  and  hats,  10  per  centum;    *    *    * 

Art.  29.  Liveries  and  livery  boots  and  hats. — For  the  purpose  of 
the  tax,  the  enumerated  articles  include  the  uniforms  of  personal  or 
domestic  servants  or  of  doormen,  footmen,  pages,  bell  boys,  and 
similar  employees  of  clubs,  hotels,  theaters,  cafes,  stores,  and  similar 
places;  but  uniforms  otherwise  taxed,  and  the  uniforms  of  employees 
of  public-service  corporations,  such  as  railroad,  telegraph,  and  tele- 
phone companies,  are  not  taxable. 

HUNTING  GARMENTS. 

(18)  Hunting  and  shooting  garments  and  riding  habits,  10  per  centum;    *    *    * 

Art.  30.  Hunting  and  shooting  garments  and  riding  habits. — Hunt- 
ing and  shooting  garments  and  riding  habits  are  deemed  to  include 
articles  primarily  adapted  for  use  in  hunting,  shooting,  and  riding, 


16  EXCISE  TAXES  ON   SALES  BY  MANUFACTURER.  §900 

and  commonly  so  used,  such  as  hunting  coats,  sleeveless  and  other; 
duck  shooters'  jackets  and  coats;  ladies'  divided  skirts  and  shell 
skirts;  ladies'  riding  coats;  men's  riding  breeches;  deer  stalkers' 
hats;  and  shell  belts.  Articles  coming  within  the  above  definition 
Whose  use  is  intended  to  be  for  purposes  other  than  hunting,  shooting, 
or  riding  are  exempt  from  the  tax.  Every  manufacturer  who  claims 
exemption  from  the  tax  on  this  ground  must  have  in  his  possession 
at  the  time  the  goods  are  shipped  or  sold  (whichever  is  prior)  an  order 
or  contract  of  sale  with  certificate  of  the  purchaser  printed  thereon 
or  in  writing  and  permanently  attached  thereto,  showing  that  such 
articles  are  to  he  used  for  purposes  other  than  hunting,  shooting,  or 
riding.  If  in  any  case  such  a  statement  can  not  be  produced  on 
demand  of  any  authorized  agent  of  the  department,  the  tax  in  respect 
to  the  sale  will  be  considered  in  default. 

FUR  GOODS. 

(19)  Articles  made  of  fur  on  the  hide  or  pelt,  or  of  which  any  such  fur  is 
the  component  material  of  chief  value,  10  per  centum;     *    *     * 

Art.  31.  Fur  goods. — As  used  in  these  regulations  the  term  "fur 
article"  includes  articles  made  of  fur  on  the  hide  or  pelt  or  of  which 
any  such  fur  is  the  component  material  of  chief  value  and  all  such 
articles  as  are  commercially  known  and  sold  as  fur  articles.  Raw, 
dressed,  and  dyed  skins  are  not  subject  to  the  tax  when  sold  to  a 
manufacturer  for  use  in  the  manufacture  of  fur  articles.  Such  skins, 
however,  are  subject  to  the  tax  when  sold  to  a  consumer.  The  tax 
is  not  confined  to  articles  of  wearing  apparel.  For  example,  fur  rugs 
and  fur  robes  are  subject  to  the  tax.  The  "component  material  of 
chief  value"  of  any  article  is  that  component  material  which  is  not 
exceeded  in  value  by  any  other  single  component  material.  The 
value  of  each  component  material  shall  be  determined  by  the  cost 
thereof  to  the  manufacturer.  The  cost  of  production  is  no  part  of 
the  value  of  any  other  single  component  material.  The  tax  attaches 
to  each  sale  of  a  fur  article  by  the  manufacturer.  The  provisions  for 
credit  for  taxes  already  paid  contained  in  article  6  will  apply  where 
taxes  have  been  paid  in  respect  of  any  sale  and  the  article  so  sold  is 
subjected  to  a  further  process  of  manufacture  and"  again  sold.  Ordi- 
nary repairs  are  not  taxable,  but  when  new  fur  is  added  the  tax 
attaches  to  such  fur,  and  the  price  for  the  job  will  be  presumed  to  be 
the  price  for  which  such  fur  is  sold  unless  it  is  billed  as  a  separate  item, 
in  which  case  the  tax  attaches  to  the  value  properly  ascribable  to  the 
fur  in  its  manufactured  form. 


§900  EXCISE   TAXES   ON   SALES  BY   MANUFACTURER.  17 

PLEASURE  BOATS. 

(20)  Yachts  and  motor  boats  not  designed  for  trade,  fishing,  or  national 
defense:  and  pleasure  boats  and  pleasure  canoes  if  sold  for  more  than  $15, 
10  per  centum;     *    *     * 

'  Art.  32.  Yachts  and  motor  boats. — A  "yacht"  is  a  vessel  larger 
than  a  rowboat,  used  either  for  private  pleasure,  official  trips,  or 
racing.  The  term  "trade"  is  synonymous  with  the  term  "busi- 
ness." A  boat  commonly  known  as  an  "excursion  boat"  or  of  that 
general  type  and  regularly  in  service  in  carriage  of  the  public  is 
used  for  business  purposes  and  sales  of  such  boats  are  not  subject 
to  the  tax.  Motor  boats  which  are  to  be  rented  out  by  summer 
resorts,  etc.,  for  the  pleasure  of  the  persons  renting  the  same  aro 
not  designed  for  trade  within  the  meaning  of  the  act. 


TOILET  SOAPS. 


(21)  Toilet  soaps  and  toilet  soap  powders,  3  per  centum.     * 

Art.  33.  Toilet  soaps  and  toilet-soap  powders.^Soaps  and  soap 
powders  advertised  or  held  out  as  suitable  for  toilet  purposes  or 
for  application  to  the  body,  or  part  of  the  body,  as  cleansing  agents, 
are  taxable.  Toilet  soap  may  be  in  form  either  liquid,  semiliquid, 
paste,  or  solid;  thus,  liquid  hand  soaps  and  shaving  creams  and 
powders  are  taxable.  A  soap  used  chiefly  for  removing  grease  and 
stains  from  the  hands,  though  capable  of  an  incidental  use  for  cleaning 
pots  and  pans,  is  taxable  as  a  toilet  soap.  A  soap  capable  of  use  as 
a  shampoo,  though  sold  chiefly  in  bulk  to  laundries  and  cleaners,  is 
taxable  when  sold  in  separate  packages,  though  not  when  sold  in 
bulk.  A  soap  which  is  made,  advertised,  held  out,  or  sold  primarily 
for  general  cleansing  purposes,  but  which  may  have  an  incidental 
and  trivial  use  as  a  toilet  soap,  is  not  taxable. 

MANUFACTURER  ALSO  RETAILER. 

If  any  manufacturer,  producer,  or  importer  of  any  of  the  articles  enum- 
erated in/ this  section  customarily  sells  such  articles  both  at  wholesale  and  re- 
tail, the  tax  in  the  case  of  any  article  sold  by  him  at  retail  shall  be  computed 
on  the  price  for  which  like  articles  are  sold  by  him  at  wholesale.     *    *    * 

Art.  34.  Manufacturer  also  retailer. — By  "customarily  sells"  is 
meant  a  bona  fide  practice  of  selling  the  same  article  at  both  whole- 
sale and  retail,  in  substantial  quantities,  and  not  mere  occasional 
sales  at  wholesale,  with  the  bulk  of  the  business  done  at  retail. 
Only  a  manufacturer  who  does  both  a  wholesale  and  retail  business 
and  holds  himself  out  as  a  wholesaler  as  well  as  a  retailer  with  respect 
to  the  goods  sold  will  be  entitled  to  compute  the  lax  upon  goods 
sold  at  retail  on  the  price  for  which  like  articles  are  sold  by  him  at 
wholesale.     As  to  articles  sold  at  wholesale,  the  tax  paid  must  bo 


18  EXCISE  TAXES   ON   SALES  BY   MANUFACTURER.  §901 

based  on  the  actual  selling  price  of  each  article  sold.  As  to  sales 
at  retail,  the  lax  on  each  such  sale  made  during  any  calendar  month 
must  be  based  on  the  average  wholesale  price  of  all  sales  of  like 
articles  made  at  wholesale  during  the  previous  calendar  month.  This 
average  wholesale  price  is  to  be  obtained  by  dividing  the  sum  of  the 
actual  selling  prices  of  all  such  articles  sold  at  wholesale  during  such 
previous  calendar  month  by  the  total  number  of  such  articles  so  sold. 

REPEAL  OF  FORMER  TAXES. 

The  taxes  imp<  sed  by  this  section  shall,  in  the  ease  of  any  article  in  respect 
to  which  a  corresponding  tax  is  imposed  by  section  GOO  of  the  Revenue  Act 
of  1917,  be  in  lieu  of  such  tax. 

Art.  35.  Repeal  of  former  taxes. — The  present  taxes  supersede 
the  excise  taxes  imposed  by  the  Revenue  Act  of  1917  upon  the  sale  of 
automobiles,  musical  instruments,  sporting  goods,  chewing  gum, 
cameras,  toilet  soaps  and  similar  articles.  The  Revenue  Act  of  1917 
remains  in  force  for  the  assessment  and  collection  of  all  taxes  which 
have  accrued  thereunder,  and  for  the  imposition  and  collection  of  all 
penalties  or  forfeitures  which  have  accrued  and  may  accrue  in  rela- 
tion to  any  such  taxes.  In  the  case  of  any  tax  imposed  by  the  Reve- 
nue Act  of  1917,  if  there  is  a  tax  imposed  by  the  present  statute  in  lieu 
thereof,  the  provision  imposing  such  tax  remains  in  force  until  the 
corresponding  tax  under  the  present  statute  takes  effect.     See  section 

1400  of  the  statute. 

COLORABLE  SALES. 

Sec  901.  That  if  any  person  manufactures,  produces  or  imports  any 
article  enumerated  in  section  900,  or  leases  or  licenses  for  exhibition  any 
positive  motion- picture  film  containing  a  picture  ready  for  projection,  and, 
whether  through  any  agreement,  arrangement,  or  understanding,  or  other- 
wise, sells,  leases  or  licenses  such  article  at  less  than  the  fair  market  price 
obtainable  therefor,  either  (a)  in  such  manner  as  directly  or  indirectly  to 
benefit  such  person  or  any  person  directly  or  indirectly  interested  in  the 
business  of  such  person,  or  (b)  with  intent  to  cause  such  benefit,  the  amount 
for  which  such  article  is  sold,  leased  or  licensed  shall  be  taken  to  be  the 
amount  which  would  have  been  received  from  the  sale,  lease  or  license  of 
such  article  if  sold,  leased  or  licensed  at  the  fair  market  price. 

Art.  36.  Colorable  sales. — If  a  manufacturer,  through  the  device  of 
a  selling  branch  or  in  any  other  manner,  contrives  to  sell  under  the 
market  price,  with  the  result  of  benefiting  his  business  or  with  the 
intent  to  cause  such  benefit,  the  tax  shall  be  based  on  the  fair  market 
value  of  the  articles  and  not  on  their  nominal  selling  price.  See 
article  8. 


§  1304  EXCISE   TAXES   ON"   SALES  BY   MANUFACTURER.  19 

RETURN  AND  PAYMENT  OF  TAX. 

Sec.  903.  That  every  person  liable  for  any  tax  imposed  by  section  900, 
902,  or  906,  shall  make  monthly  returns  under  oath  in  duplicate  and  pay  the 
taxes  imposed  by  such  sections  to  the  collector  for  the  district  in  which  ia 
located  the  principal  place  of  business.  Such  returns  shall  contain  such 
information  and  be  made  at  such  times  and  in  such  manner  as  the  Commis- 
sioner, with  the  approval  of  the  Secretary,  may  by  regulations  prescribe. 

The  tax  shall,  without  assessment  by  the  Commissioner  or  notice  from  the 
collector,  be  due  and  payable  to  the  collector  at  the  time  so  fixed  for  filing 
the  return.  If  the  tax  is  not  paid  when  due,  there  shall  be  added  as  part  of 
the  tax  a. penalty  of  5  per  centum,  together  with  interest  at  the  rate  of  1  per 
centum  for  each  full  month,  from  the  time  when  the  tax  became  due. 

Art.  37.  Return  and  payment  of  tax. — Each  manufacturer  of  any 
of  the  articles  hereinabove  enumerated  must  make  monthly  returns 
under  oath  in  duplicate  and  pay  the  taxes  imposed  on  such  articles 
to  the  collector  of  internal  revenue  for  the  district  in  which  his 
principal  place  of  business  is  located.  Any  return  may,  if  the  amount 
of  the  tax  covered  thereby  is  not  in  excess  of  $10,  be  signed  or  acknowl- 
edged before  two  witnesses  instead  of  under  oath.  The  returns  shall  be 
made  on  form  728  (revised).  Instructions  for  preparing  Avill  be  found 
on  the  back  of  the  form.  The  returns  are  to  be  rendered  and  the  tax 
paid  on  or  before  the  last  day  of  each  month  covering  all  the  transac- 
tions of  the  preceding  month,  the  first  return  to  cover  all  transactions 
after  February  24,  1919,  and  before  April  1,  1919.  Branch  houses 
should  in  general  make  reports  to  the  parent  house,  which  is  liable 
to  make  monthly  returns  of  the  sales  of  the  branch  house.  An 
itinerant  manufacturer  should  make  return  and  pay  the  tax  to  the 
collector  of  the  district  where  the  sales  were  made.  The  books  of 
every  person  liable  to  the  tax  shall  be  open  at  all  times  for  inspection 
by  examining  internal  revenue  officers.     As  to  penalties,  see  article  40. 

TRADE  WITH  POSSESSIONS  OF  UNITED  STATES. 

Sec  1304.  That  there  shall  be  levied,  collected,  and  paid  in  the  United 
States,  upon  articles  coming  into  the  United  States  from  the  Virgin  Islands, 
a  tax  equal  to  the  internal-revenue  tax  imposed  in  the  United  States  upon 
like  articles  of  domestic  manufacture;  such  articles  shipped  from  such 
islands  to  the  United  States  shall  be  exempt  from  the  payment  of  any  tax 
imposed  by  the  internal-revenue  laws  of  such  islands:  Provided,  That  there 
shall  he  levied,  collected,  and  paid  in  such  islands,  upon  articles  imported 
from  the  United  States,  a  tax  equal  to  the  internal-revenue  tax  imposed  in 
such  islands  upon  like  articles  there  manufactured;  and  such  articles  going 
into  such  islands  from  the  United  States  shall  be  exempt  from  payment  of 
any  tax  imposed  by  the  internal-revenue  laws  of  the  United  States. 

Art.  38.  Trade  with  possessions  of  United  States. — A  sale  which 
results  in  the  shipment  of  articles  into  the  United  States  from  the 
Virgin  Islands  is  taxable  to  the  same  extent  as  a  sale  of  articles 
within  the  United  States.  Articles  going  into  the  Virgin  Islands 
from  the  United  States  are  free  from  tax  in  the  United  States.  The 
same  rules  apply  to  trade  with  Porto  Rico  and  the  Philippine  Islands. 


20  EXCISE  TAXES  ON   SALES  BY   MANUFACTURER.         §§1305,1308 

See  section  1000  of  the  Revenue  Act  of  1917  and  section  V  of  the  Act 

of  August  4,  1909,  as  amended  by  section  IV,  subdivision  C,  of  the 

Act   of   October   3,   191.'?.     The    tax   attaches,  however,    to   articles 

shipped  to  other  possessions  of  the  United  States,  including  the  Canal 

Zone. 

EXTENSION  OF  EXISTING  STATUTES. 

Sec.  1305.  That  all  administrative,  special,  or  stamp  provisions  of  law, 
including  the  law  relating  to  the  assessment  of  taxes,  so  far  as  applicable,  are 
hereby  extended  to  and  made  a  part  of  this  Act,  and  every  person  liable  to  any 
tax  imposed  by  this  Act,  or  for  the  collection  thereof,  shall  keep  such  records 
and  render,  under  oath,  such  statements  and  returns,  and  shall  comply  with 
euch  regulations  as  the  Commissioner,  with  the  approval  of  the  Secretary,  may 
from  time  to  time  prescribe; 

Whenever  in  the  judgment  of  the  Commissioner  necessary  he  may  require 
any  person,  by  notice  served  upon  him,  to  make  a  return  or  such  statements 
as  he  deems  sufficient  to  show  whether  or  not  such  person  is  liable  to  tax. 

The  Commissioner,  for  the  purpose  of  ascertaining  the  correctness  of  any 
return  or  for  the  purpose  of  making  a  return  where  none  has  been  made,  is  here- 
by authorized,  by  any  revenue  agent  or  inspector  designated  by  him  for  that 
purpose,  to  examine  any  books,  papers,  records  or  memoranda  bearing  upon  the 
matters  required  to  be  included  in  the  return,  and  may  require  the  attendance 
of  the  person  rendering  the  return  or  of  any  officer  or  employee  of  such  person, 
or  the  attendance  of  any  other  person  having  knowledge  in  the  premises,  and 
may  take  his  testimony  with  reference  to  the  matter  required  by  law  to  be 
included  in  such  return,  with  power  to  administer  oaths  to  such  person  or 
persons. 

Art.  39.  Aids  to  collection  of  tax. — In  collecting  the  excise  taxes 
the  Commissioner  has  the  benefit  of  all  existing  internal  revenue  laws. 
In  aid  of  the  enforcement  of  the  statute  the  Commissioner  may 
require  any  person  to  keep  specified  records,  to  render  returns  and 
statements  as  directed,  to  submit  himself  and  his  books  to  examina- 
tion, and  to  comply  with  such  regulations  as  may  be  prescribed. 

PENALTIES. 

Sec.  1308.  (a)  That  any  person  required  under  Titles  V,  VI,  VII,  VIII, 
IX,  X,  or  XII,  to  pay,  or  to  collect,  account  for  and  pay  over  any  tax,  or 
required  by  law  or  regulations  made  under  authority  thereof  to  make  a  return 
or  supply  any  information  for  the  purposes  of  the  computation,  assessment  or 
collection  of  any  such  tax,  who  fails  to  pay,  collect,  or  truly  account  for  and 
pay  over  any  such  tax,  make  any  such  return  or  supply  any  such  information 
at  the  time  or  times  required  by  law  or  regulation  shall  in  addition  to  other 
penalties  provided  by  law  be  subject  to  a  penalty  of  not  more  than  $1,000. 

(b)  Any  person  who  willfully  refuses  to  pay,  collect,  or  truly  account  for 
and  pay  over  any  such  tax,  make  such  return  or  supply  such  information 
at  the  time  or  times  required  by  law  or  regulation,  or  who  willfully  attempts 
in  any  manner  to  evade  such  tax  shall  be  guilty  of  a  misdemeanor  and  in 
addition  to  other  penalties  provided  by  law  shall  be  fined  not  more  than 
$10,000  or  imprisoned  for  not  more  than  one  year,  or  both,  together  with  the 
costs  of  prosecution. 

(c)  Any  person  who  willfully  refuses  to  pay,  collect,  or  truly  account  for 
and  pay  over  any  such  tax  shall  in  addition  to  other  penalties  provided  by 
law  be  liable  to  a  penalty  of  the  amount  of  the  tax  evaded,  or  not  paid,  col- 


J  3176  EXCISE   TAXES   ON   SALES  BY   MANUFACTURER.  21 

lected,  or  accounted  for  and  paid  over,  to  be  assessed  and  collected  in  the 
same  manner  as  taxes  are  assessed  and  collected:  Provided,  however,  That  no 
penalty  shall  be  assessed  under  this  subdivision  for  any  offense  for  which  a 
penalty  may  be  assessed  under  authority  of  section  3176  of  the  Revised 
Statutes,  as  amended,  or  of  sections  605  or  620  of  this  Act,  or  for  any  offense 
for  which  a  penalty  has  been  recovered  under  section  3256  of  the  Revised 
Statutes. 

(d)  The  term  "person"  as  used  in  this  section  includes  an  officer  or  em- 
ployee, of  a  corporation  or  a  member  or  employee  of  a  partnership,  who  as  such 
officer,  employee,  or  member  is  under  a  duty  to  perform  the  act  in  respect 
of  which  the  violation  occurs. 

Art.  40.  Penalties. — Any  person,  including  an  officer  or  employee 
of  a  corporation  and  a  member  or  employee  of  a  partnership  in  the 
course  of  his  duty,  who  fails  to  pay  or  collect  a  tax  or  to  make  a  return, 
is  liable  to  a  penalty  of  SI, 000.  If  his  failure  is  willful,  or  he  other- 
wise tries  to  evade  the  tax,  he  is  guilty  of  a  misdemeanor  and  liable 
to  a  fine  of  $10,000  and  imprisonment  for  a  year.  If  his  failure  is 
willful,  he  is  also  liable  to  the  addition  to  the  tax  of  a  25  per  cent 
penalty  for  failure  to  make  a  return  and  a  50  per  cent  penalty  for  a 
fraudulent  return.  Section  3176  of  the  Revised  Statutes,  as  amended 
by  section  1317  of  the  Revenue  Act  of  1918,  provides: 

Sec.  3176.  If  any  person,  corporation,  company,  or  association  fails  to 
make  and  file  a  return  or  list  at  the  time  prescribed  by  law  or  by  regulation 
made  under  authority  of  law,  or  makes,  willfully  or  otherwise,  a  false  or 
fraudulent  return  or  list,  the  collector  or  deputy  collector  shall  make  the 
return  or  list  from  his  own  knowledge  and  from  such  information  as  he  can 
obtain  through  testimony  or  otherwise.  In  any  such  case  the  Commissioner 
may,  from  his  own  knowledge  and  from  such  information  as  he  can  obtain 
through  testimony  or  otherwise,  make  a  return  or  amend  any  return  made  by 
by  a  collector  or  deputy  collector.  Any  return  or  list  so  made  and  subscribed 
by  the  Commissioner,  or  by  a  collector  or  deputy  collector  and  approved  by 
the  Commissioner,  shall  be  prima  facie  good  and  sufficient  for  all  legal  purposes. 

If  the  failure  to  file  a  return  or  list  is  due  to  sickness  or  absence,  the  collector 
may  allow  such  further  time,  not  exceeding  thirty  days,  for  making  and  filing 
the  return  or  list  as  he  deems  proper. 

The  Commissioner  of  Internal  Revenue  shall  determine  and  assess  all 
taxes,  other  than  stamp  taxes,  as  to  which  returns  or  lists  are  so  made  under 
the  provisions  of  this  section.  In  case  of  any  failure  to  make  and  file  a  return 
or  list  within  the  time  prescribed  by  law,  or  prescribed  by  the  Commissioner 
of  Internal  Revenue  or  the  collector  in  pursuance  of  law,  the  Commissioner 
of  Internal  Revenue  shall  add  to  the  tax  25  per  centum  of  its  amount,  except 
that  when  a  return  is  filed  after  such  time  and  it  is  shown  that  the  failure  to 
file  it  was  due  to  a  reasonable  cause  and  not  to  willful  neglect,  no  such  addi- 
tion shall  be  made  to  the  tax.  In  case  a  false  or  fraudulent  return  or  list  ia 
willfully  made,  the  Commissioner  of  Internal  Revenue  shall  add  to  the  tax 
50  per  centum  of  its  amount. 

The  amount  so  added  to  any  tax  shall  be  collected  at  the  same  time  and  in 
the  same  manner  and  as  part  of  the  tax  unless  the  tax  has  been  paid  before 
the  discovery  of  1ha  neglect,  falsity,  or  fraud,  in  which  case  the  amount  so 
added  shall  be  collected  in  the  same  manner  as  the  tax. 

See  also  sections  903  and  1312  (4)  and  articles  37  and  47. 


22  EXCISE  TAXES  ON   SALES  BY   MANUFACTURER.  §1310 

CREDITS  AND  REFUNDS. 

Sec.  1310.  (a)  That  in  the  case  of  any  overpayment  or  ovcreollection  of 
any  tax  imposed  by  section  628  or  630  or  by  Title  V,  Title  VII  r,  or  Title  IX, 
the  person  making  such  overpayment  or  overcollectidn  may  take  credit 
therefor  against  taxes  due  upon  any  monthly  return,  and  shall  make  refund 
of  any  excessive  amount  collected  by  him  upon  proper  application  by  the 
person  entitled  thereto. 

(h)  Wherever  in  this  Act  a  tax  is  required  to  he  paid  by  the  purchaser  to 
the  vendor  at  the  time  of  a  sale,  and  such  sale  is  made  on  credit,  then,  under 
regulations  prescribed  by  the  Commissioner,  with  the  approval  of  the  Secre- 
tary, the  tax  may,  at  the  option  of  the  vendor,  be  returned  and  paid  by  him 
to  the  United  States  as  if  paid  to  him  by  the  purchaser  at  the  time  of  the  sale, 
and  in  such  case  the  vendor  shall  have  a  right  of  action  in  any  court  of  com- 
petent jurisdiction  against  the  purchaser  for  the  amount  of  the  tax  so  re- 
turned and  paid  to  the  United  States.    *    *    * 

Art.  41.  Credits  and  refunds. — If  a  manufacturer  overpays  the 
tax  due  with  one  monthly  return,  he  may  take  credit  for  the  over- 
payment against  the  tax  due  with  a  succeeding  return.  If  under 
section  1312  of  the  statute  or  otherwise  he  similarly  overcollects  the 
tax,  he  shall  refund  the  ovcreollection  to  the  purchaser  from  him. 
If  in  a  case  under  section  1312  he  sells  on  credit,  other  than  on  con- 
ditional sale,  he  shall  return  the  tax  at  the  time  of  the  sale,  hut  may 
defer  collection  of  it  from  the  purchaser.  See  articles  44-46.  For 
the  procedure  with  reference  to  claims  for  refund  see  sections  3220 
and  3225  of  the  Revised  Statutes,  as  amended  by  section  1316  of  the 
Revenue  Act  of  1918,  and  Regulations  No.  14  (revised). 

EXPORTS. 

(c)  Under  such  rules  and  regulations  as  the  Commissioner  with  the 
approval  of  the  Secretary  may  prescribe,  the  taxes  imposed  under  the 
provisions  of  Titles  VI,  VII,  or  IX  shall  not  apply  in  respect  to  articles  sold 
or  leased  for  export  and  in  due  course  so  exported.  Under  such  rules  and 
regidations  the  amount  of  any  internal-revenue  tax  erroneously  or  illegally 
collected  in  respect  to  exported  articles  may  be  refunded  to  the  exporter  of 
the  article,  instead  of  to  the  manufacturer,  if  the  manufacturer  waives  any 
claim  for  the  amount  so  to  be  refunded. 

Art.  42.  Exemption  of  export  sale. — The  tax  does  not  attach  to 
the  sale  of  an  article  which  is  either  (1)  shipped  direct  to  a  foreign 
destination  by  the  manufacturer  himself,  or  (2)  both  (a)  sold  by  him 
for  export  and  (b)  in  due  course  so  exported  by  the  purchaser.  Where 
a  manufacturer  at  the  time  an  article  is  sold  or  shipped  (whichever  is 
prior)  has  in  his  possession  an  order  or  contract  of  sale  showing  in 
writing  (1)  that  the  manufacturer  is  to  export  the  article,  or  (2)  that 
the  purchaser  is  buying  the  article  in  order  to  export  it  prior  to  its 
being  used  or  subjected  to  further  manufacture,  there  is  a  presump- 
tion that  the  sale  of  the  article  is  exempt  from  tax,  as  an  export  sale, 
and  the  manufacturer  may,  for  a  period  of  six  months  from  the  date 
of  sale  or  shipment  (whichever  is  prior),  rely  on  such  presumption. 


§1312  EXCISE   TAXES   ON   SALES   BY   MANUFACTURER.  23 

This  temporary  presumption  becomes  a  permanent  presumption  upon 
the  manufacturer's  receiving,  and  attaching  to  such  order  or  contract, 
before  the  termination  of  such  period  of  six  months,  due  "proof  of 
exportation  "  (see  article  43)  of  such  article.  On  the  other  hand,  if, 
within  such  period  of  six  months,  the  manufacturer  has  not  received, 
and  attached  to  such  order  or  contract,  such  "proof  of  exportation," 
then  the  temporary  presumption  that  such  sale  is  an  export  sale 
disappears,  and  the  manufacturer  shall  include  a  tax  on  the  sale  of 
such  article  in  his  return  for  the  month  in  which  such  period  of  six 
months  expires.  The  order  or  contract  of  sale  and  the  "proof  of 
exportation"  must  be  preserved  by  the  manufacturer  in  such  a  way 
as  to  be  readily  accessible  for  inspection  by  internal  revenue  officers. 
No  sale  shall  be  considered  to  be  exempt  from  tax  under  section 
1310  (c)  of  the  act,  unless  its  character  as  an  export  sale  has  been 
established  in  accordance  with  the  above  provisions. 

Art.  43.  Proof  of  exportation. — By  the  term  ' '  proof  of  exportation  " 
is  meant:  (1)  An  affidavit  containing  the  following  information:  The 
name  and  address  of  the  manufacturer,  the  name  and  address  of  the 
exporter  (who,  if  not  the  manufacturer,  must  be  a  person  who  has 
purchased  direct  from  the  manufacturer),  the  respective  dates  of  the 
sale  or  shipment  (whichever  is  prior),  and  exportation  of  the  article, 
the  price  for  which  purchased,  the  fact  that  the  article  has  been  ex- 
ported by  the  manufacturer  or  original  purchaser  without  having 
been  used  or  subjected  to  further  manufacture,  the  name  of  the  port 
of  foreign  destination,  the  name  and  address  of  the  carrier  issuing  the 
export  bill  of  lading,  and  any  further  information  necessary  to  iden- 
tify the  article  sold  with  the  article  exported;  and  (2)  attached  to 
such  affidavit  a  copy  of  the  export  bill  of  lading,  or  a  certificate,  by 
the  agent  or  representative  of  the  export  carrier  showing  the  exporta- 
tion of  the  article,  or,  if  exported  by  parcels  post,  a  cop}1"  of  the  cer- 
tificate of  mailing. 

TRANSFER  OF  BURDEN  OF  TAX. 

Sfv.  1312.  (1)  That  (a)  if  any  person  has  prior  to  May  9,  1917,  made  a  bona 
fide  contract  with  a  dealer  for  the  sale  or  lease,  after  the  tax  lakes  effect,  of 
any  article  in  respect  to  which  a  tax  is  imposed  under  Title  VI,  VII,  or  IX, 
or  under  subdivision  13  of  Schedule  A  of  Title  XI,  or  under  this  subdi- 
vision, and  (b)  if  such  contract  does  not  permit  the  adding  of  the  whole  of 
such  tax  to  the  amount  to  be  paid  under  such  contract,  then  the  vendee  or 
•  lessee  shall,  in  lieu  of  the  vendor  or  lessor,  pay  so  much  of  such  tax  as  is  not 
bo  permitted  to  be  added  to  the  contract  price.  If  a  contract  of  the  char- 
acter above  described  was  made  with  any  person  other  than  a  dealer,  the 
tax  collected  under  this  Act  shall  be  the  tax  in  force  on  May  9,  1917. 

(2)  If  (a)  any  person  has  prior  to  September  3,  1918,  made  a  bona  fide 
contract  with  a  dealer  for  the  sale  or  lease,  after  the  tax  takes  effect,  of  any 
article  in  respect  to  which  a  tax  is  imposed  under  Title  VI,  VII,  or  IX,  or 
under  subdivision  13  of  Schedule  A  of  Title  XI,  or  under  this  subdivision, 


24  EXCISE   TAXES   OIST   SALES   BY  MANUFACTURER.  {  1312 

and  in  respect  to  which  no  corresponding  tax  was  imposed  by  the  Revenue 
Act  of  1917,  and  (b)  such  contract  does  not  permit  the  adding,  to  the  amount 
to  be  paid  under  such  contract,  of  the  whole  of  the  tax  imposed  by  this  Act, 
then  the  vendee  or  lessee  shall,  in  lieu  of  the  vendor  or  lessor,  pay  so  much 
of  the  tax  imposed  by  this  Act  as  is  not  so  permitted  to  be  added  to  the 
contract  price.  If  a  contract  of  the  character  above  described  was  made 
with  any  person  other  than  a  dealer,  no  tax  shall  be  collected  under  this  act. 

(3)  If  (a)  any  person  has  prior  to  September  3,  1918,  made  a  bona  fide 
contract  with  a  dealer  for  the  sale  or  lease,  after  the  tax  takes  effect,  of  any 
article  in  respect  to  which  a  tax  is  imposed  under  Title  VI,  VII,  or  IX,  or 
under  subdivision  13  of  Schedule  A  of  Title  XI,  or  under  this  subdivision, 
and  in  respect  to  which  a  corresponding  tax  was  imposed  by  the  Revenue 
Act  of  1917,  and  (b)  such  contract  does  not  permit  the  adding  to  the  amount 
to  be  paid  under  such  contract,  of  the  whole  of  the  difference  between  such 
tax  and  the  corresponding  tax  imposed  by  the  Revenue  Act  of  1917,  then  the 
vendee  or  lessee  shall,  in  lieu  of  the  vendor  or  lessor,  pay  so  much  of  such 
difference  as  is  not  so  permitted  to  be  added  to  the  contract  price.  If  a  con- 
tract of  the  character  above  described  was  made  with  any  person  other 
than  a  dealer,  the  tax  collected-  under  this  Act  shall  be  the  tax  in  force  on 
September  3,  1918. 

(4)  The  taxes  payable  by  the  vendee  or  lessee  under  this  section  shall 
be  paid  to  the  vendor  or  lessor  at  the  time  the  sale  or  lease  is  consummated, 
and  collected,  returned,  and  paid  to  the  United  States  by  such  vendor  or 
lessor  in  the  same  manner  as  provided  in  section  502. 

(5)  The  term  "dealer"  as  used  in  this  section  includes  a  vendee  who 
purchases  any  article  with  intent  to  use  it  in  the  manufacture  or  production 
of  another  article  intended  for  sale. 

(6)  This  section  shall  not  apply  to  any  tax  imposed  by  section  906. 

Art.  44.  Contract  of  sale  before  May  9,  1917.— If  before  May  9, 
1917,  A,  a  manufacturer,  made  with  B,  a  wholesaler,  a  contract  of 
Bale  which  does  not  permit  the  addition  of  the  tax  to  the  amount 
payable  under  the  contract,  then  the  liability  for  the  tax  is  on  B, 
with  the  duty  on  A  only  to  collect  and  pay  it  to  the  collector  as  pro- 
vided in  article  47.  If  B  also  made  before  May  9,  1917,  a  contract 
of  the  character  described  with  C,  a  retailer,  the  liability  for  the  tax 
thus  imposed  on  B  is  transferred  from  B  to  C,  B  being  obliged  only 
to  collect  the  tax  from  C  and  to  pay  it  over  to  A  for  payment  to  the 
collector.  If,  however,  any  person  before  May  9,  1917,  made  a  con- 
tract of  the  character  described  with  any  person. other  than  a  dealer 
as  defined  in  article  48,  no  tax  is  payable  in  respect  of  the  sale  by 
him,  since  on  May  9,  1917,  no  tax  was  in  force  on  the  sale  of  any  of 
the  articles  described  in  these  regulations. 

Art.  45.  Contract  of  sale  before  September  3,  1918,  of  article  not 
then  taxable. — If  before  September  3,  1918,  A,  a  manufacturer  of 
candy  or  other  article  not  taxable  under  the  Revenue  Act  of  1917, 
made  with  B,  a  wholesaler,  a  contract  which  does  not  permit  the 
addition  of  the  tax  to  the  amount  payable  under  the  contract,  then 
the  liability  for  the  tax  is  on  B,  with  the  duty  on  A  only  to  collect 
and  pay  it  to  the  collector  as  provided  in  article  47.     If  B  also  made 


§1312  EXCISE   TAXES   ON   SALES  BY   MANUFACTURER.  25 

before  September  3,  1918,  a  contract  of  the  character  described  with 
Q,  a  retailer,  the  liability  for  the  tax  thus  imposed  on  B  is  transferred 
from  B  to  C,  B  being  obliged  only  to  collect  the  tax  from  C  and  to 
pay  it  over  to  A  for  payment  to  the  collector.  If,  however,  any 
person  before  September  3,  1918,  made  a  contract  of  the  character 
described  for  the  sale  of  candy  with  any  person  other  than  a  dealer 
as  defined  im  article  48,  no  tax  is  payable  in  respect  of  such  sale  by 
him. 

Art.  46.  Contract  of  sale  before  September  3,  1918,  of  article  then 
taxable. — If  before  September  3,  1918,  A,  a  manufacturer  of  chewing 
gum  or  other  article  taxable  under  the  Revenue  Act  of  1917,  made 
with  B,  a  wholesale^  a  contract  which  does  not  permit  the  addition 
to  the  amount  payable  under  the  contract  of  the  difference  between 
the  present  tax  and  the  corresponding  tax  imposed  by  the  Revenue 
Act  of  1917,  then  B  is  liable  for  such  difference.  A  must  collect  and 
pay  to  the  collector  as  provided  in  article  47  the  portion  of  the  tax 
for  which  B  is  so  liable,  and  he  must  also  include  in  his  return  and 
pay  the  portion  of  the  tax  for  which  B  is  not  so  liable.  If  B  also 
made  before  September  3,  1918  a  contract  of  the  character  described 
with  C,  a  retailer,  the  liability  for  the  tax  thus  imposed  on  B  is 
transferred  from  B  to  C,  who  is  liable  for  the  difference  between  the 
tax  imposed  by  the  present  statute  and  the  tax  imposed  by  the 
Revenue  Act  of  1917.  B  must  collect  and  pay  over  to  A  for  payment 
to  the  collector  the  portion  of  the  tax  for  which  C  is  so  liable.  For 
example,  if  any  person  made  before  September  3,  1918,  a  contract  of 
the  character  described  for  the  sale  of  chewing  gum  with  any  person 
other  than  a  dealer  as  denned  in  article  48,  the  tax  to  be  collected 
under  the  present  statute  will  be  the  tax  in  force  on  September  3, 
1918;  that  is,  the  tax  under  the  Revenue  Act  of  1917. 

Art.  47.  Return  of  tax. — Each  person  receiving  any  payments 
referred  to  in  section  1312  of  the  statute  shall  collect  the  amount  of 
the  tax,  if1  any,  imposed  by  such  section  from  the  person  making 
such  payments,  and  shall  make  monthly  returns  under  oath  in  dupli- 
cate and  pay  the  taxes  so  collected  to  the  collector  of  the  district  in 
which  his  principal  office  or  place  of  business  is  located.  Any  person 
making  a  refund  of  any  payment  upon  which  the  fax  is  so  collected 
may  repay  therewith  the  amount  of  the  tax  collected  on  such  pay- 
ment; and  the  amount  so  repaid  may  be  credited  against  amounts 
included  in  any  subsequent  monthly  return.  The  return  shall  In* 
made  on  Form  728  (revised)  on  or  before  the  last  day  of  the  month 
following  the  month  in  which  the  sale  is  made,  as  provided  in  article 
37.  The  tax  shall  without  assessment  by  the  Commissioner  or  notice 
from  the  collector  be  due  and  payable  to  the  collector  at  the  time 
fixed  for  filing  the  return.  If  the  tax  is  not  paid  when  due,  there 
shall  be.  added  as  a  part  of  the  tax  a  penalty  of  5  per  cent,  together 


2G  EXCISE  TAXES   ON  SALES  BY   MANUFACTURER.         §§1313,1314 

with  interest  at  the  rate  of  1  per  cent  for  each  full  month  from  the 
time  when  the  tax  became  (hie. 

Art.  -IS.  Meaning  of  "dealer." — The  term  "dealer"  includes  not 
only  dealers  in  the  ordinary  sense — that  is,  persons  engaged  in  the 
business  of  selling  articles — hut  also  a  person  who  purchases  an 
article  with  the  intention  of  using  it  in  the  manufacture  or  produc- 
tion of  any  article  intended  for  sale.  The  term  does  not  include  a 
person  buying  an  article  for  his  personal  consumption  or  u^e.  The 
United  States,  a  State,  Territory,  or  a  political  subdivision  thereof, 
or  a  foreign  government,  purchasing  an  article  for  its  own  use  is  not 

a  dealer. 

FRACTIONAL  PART  OF  CENT. 

Sic.  1313.  That  in  the  payment  of  any  tax  under  this  Act  not  payable 
by  stamp  a  fractional  part  of  a  cent  shall  be  disregarded  unless  it  amounts 
to  one-half  cent  or  more,  in  which  case  it  shall  be  increased  to  1  cent. 

Art.  49.  When  fractional  part  of  cent  may  be  disregarded. — In  the 
payment  of  taxes,  and  in  each  step  or  computation  necessary  in  de- 
termining the  amount  of  the  tax,  a  fractional  part  of  a  cent  may  be 
disregarded  unless  it  amounts  to  one-half  cent  or  more,  in  which 
case  it  shall  be  increased  to  1  cent. 

MEDIUM  OF  PAYMENT  OF  TAX. 

Sec.  1314.  That  collectors  may  receive,  at  par  with  an  adjustment  for 
accrued  interest,  certificates  of  indebtedness  issued  by  the  United  States  and 
uncertified  checks  in  payment  of  income,  war-profits  and  excess-profits  taxes 
and  any  other  taxes  payable  other  than  by  stamp,  during  such  time  and  under 
such  regulations  as  the  Commissioner,  with  the  approval  of  the  Secretary,  shall 
prescribe;  but  if  a  check  so  received  is  not  paid  by  the  bank  on  which  it  is 
drawn  the  person  by  whom  such  check  has  been  tendered  shall  remain  liable 
for  the  payment  of  the  tax  and  for  all  legal  penalties  and  additions  the  same 
as  if  such  check  had  not  been  tendered. 

Art.  50.  Payment  of  tax  by  uncertified  checks. — Collectors  may 
accept  uncertified  checks  in  payment  of  excise  taxes,  provided  such 
checks  are  collectible  at  par;. that  is,  for  their  full  amount,  without 
any  deduction  for  exchange  or  other  charges.  The  collector  will 
stamp  on  the  face  of  each  check  before  deposit  the  words /'This  check 
is  in  payment  of  an  obligation  to  the  United  States  and  must  be  paid 
at  par.  No  protest,"  with  his  name  and  title.  The  day  on  which 
the  collector  receives  the  check  will  be  considered  the  elate  of  pay- 
ment so  far  as  the  taxpayer  is  concerned,  unless  the  check  is  returned 
dishonored.  If  one  check  is  remitted  to  cover  two  or  more  persons' 
taxes,  the  remittance  must  be  accompanied  by  a  letter  of  transmittal 
stating  (a)  the  name  of  the  drawer  of  the  check;  (6)  the  amount  of 
the  check;  (c)  the  amount  of  any  cash,  money  order,  or  other  instru- 
ment included  in  the  same  remittance;  (d)  the  name  of  each  person 
whose  tax  is  to  be  paid  by  the  remittance;  (e)  the  amount  of  the 
payment  on  account  of  each  person;  and  (/)  the  kind  of  tax  paid. 


§§1319,1309  EXCISE   TAXES   ON   SALES   BY   MANUFACTURER.  27 

Art.  51.  Procedure  with  respect  to  dishonored  checks. — If  the  bank 
on  which  any  such  check  is  drawn  should  refuse  to  pa}-  it  at  par, 
the  check  should  be  returned  through  the  depositary  bank  and  be 
treated  in  the  same  manner  as  a  bad  check.  All  expenses  incident  to 
the  attempt  to  collect  such  a  check  and  the  return  of  it  through  the 
depositary  bank  must  be  paid  by  the  drawer  of  the  check  to  the  bank 
on  which  it  is  drawn,  since  no  deduction  can  be  made  from  amounts 
received  in  payment  of  taxes.  See  section  3210  of  the  Revised  Stat- 
utes. If  any  taxpayer  whose  check  has  been  returned  uncollected  by 
the  depositary  bank  should  fail  at  once  to  make  the  check  good,  the 
collector  should  proceed  to  collect  the  tax  as  though  no  check  had 
been  given.  A  taxpayer  who  tenders  a  certified  check  in  payment  for 
taxes  is  also  not  released  from  his  obligation  until  the  check  has  been 
paid.     See  chapter  191  of  the  Act  of  March  2,  1911. 

MISREPRESENTATION  OF  TAX. 

Ski".  !:'.  19.  That  whoever  in  connection  with  the  .sale  or  lease,  or  offer  for 
sale  or  lease,  of  any  article,  or  for  the  purpose  of  making  such  sale  or  lease, 
makes  any  statement,  written  or  oral,  (1)  intended  or  calculated  to  lead  any 
person  to  believe  that  any  part  of  the  price  at  which  such  article  is  sold  or 
leased,  or  offered  for  sale  or  lease,  consists  of  a  tax  imposed  under  the  author- 
ity of  the  United  .States,  or  (2)  ascribing  a  particular  part  of  such  price  to  a  tax 
imposed  under  the  authority  of  the  United  States,  knowing  that  such  state- 
ment is  false  or  that  the  tax  is  not  so  great  as  the  portion  of  such  price  ascribed 
to  such  tax,  shall  be  guilty  of  a  misdemeanor  and  upon  conviction  thereof 
shall  be  punished  by  a  fine  of  not  more  than  §1,000  or  by  imprisonment  not 
exceeding  one  year,  or  both. 

Art.  52.  Misrepresentation  of  tax. — If  a  manufacturer  or  other 
vendor  misrepresents  the  tax,  he  is  guilty  of  a  misdemeanor  and  is 
liable  to  a  fine  of  $1,000  and  to  imprisonment  for  a  year.  This 
provision  is  designed,  among  other  things,  to  prevent  a  vendor 
adding  more  than  the  amount  of  the  tax  to  the  price  of  an  article 
and  representing  that  the  increase  is  due  to  the  tax. 

AUTHORITY  FOR  REGULATIONS. 

Sec.  1309.  Thai  the  Commissioner,  with  the  approval  of  the  Secretary, 
is  hereby  authorized  to  make  all  needful  rules  and  regulations  for  the  enforce- 
inent  of  I  ho  provisions  of  this  Act. 

Art.  53.  Promulgation  of  regulations. — In  pursuance  of  the  statute 
the  foregoing  regulations  are  hereby  made  and  promulgated  and  all 
rulings  inconsistent  herewith  are  hereby  revoked. 

Daniel  C.  Roper, 
Commissioner  of  Internal  licitnuc. 
Approved  May  1,  1919: 

J.  H.  MOYLE, 

Acting  Secretary  of  the  Treasury. 


INDEX. 

[References  are  to  articles.] 


Accessories  for  automobiles  and  motorcycles,  taxability 14  16 

Adjustment  of  tax 4 

Agent,  sales  by 8 

Authority  for  regulations 53 

Automobiles : 

Attachments  and  accessories,  taxability 12 

Chassis 15 

Definition 11 

Rate  of  tax 11, 12, 13 

Scope  of  tax 11 

Taxability 11 

"Automobile  trucks  and  automobile  wagons, : '  definition 12 

Basis  of  tax 3 

Boats,  taxability 32 

Branch  houses,  return  of  tax 37 

Cameras,  taxability 20 

Candy,  taxability 22 

Chewing  gum,  taxability 19 

Children 's  toys  and  games 18 

Cigar  or  cigarette  holders,  taxability 27 

Collection  of  tax,  extension  of  existing  statutes 39 

Colorable  sales 36 

Commissions  to  agents,  deduction  in  computing  price  for  purpose  of  .tax 4 

Computation  of  tax,  fractional  part  of  cent 49 

Conditional  sales,  liability  to  tax 9 

Contract  affecting  liability  of  manufacturer  to  tax 44,  45,  4G 

Credits: 

Arl  Icles  returned 5 

Overpayment  of  tax * 41 

Taxes  already  paid 6 

Date  tax  effective 1 

Dealer,  burden  of  tax  transferred  to 44 

Deductions  from  price  in  computing  same  for  purpose  of  tax 1 

Definitions: 

' '  Automobile  " '. 11 

"Automobile  truek  or  wagon  " 12 

"Customarily  sells " 34 

"Dealer  " 4S 

"Importer  " 2 

"Manufacturer  " 2,  7 

"Manufacturing  agent" 7 

"Motorcycle"..... 13 

"Parts" 15 

"Person" 2 

"Piano  player" 17 

"Producer" 2 

"Purchaser" 2 

"Retailer" 31 

29 


30  INDEX. 

Definitions — Continued. 

"Sale" 2,3 

'"Sale  in  foreign  commerce" 42 

old" 2 

"Vendor  " 2 

Delivery  charges 4 

Dictographs  and  dictaphones,  taxability 17 

Discount,  deduction  in  computing  price  for  purpose  of  tax 4 

Distributor  of  commodities,  sales  by 8 

Electric  fanB,  taxability 25 

Exchange  of  goods,  effect 5 

Exemption: 

Of  export  sale 42 

Sales  to  States 10 

Expenses  of  sale,  deduction  in  computing  price  for  purpose  of  tax....: 4 

Export,  sales  for,  taxability 42 

Fans,  electric,  taxability 25 

Films,  photographic 21 

Firearms,  taxability 22 

Fishing  rods  and  reels,  taxability 18 

Footballs,  taxability 18 

Foreign  commerce,  taxability  of  sales  in 42 

Fractional  part  of  cent ,  disregard  of,  in  computing  tax 49 

Freight  charges,  inclusion  in  computing  price  for  purpose  of  tax 4 

Fur  goods,  taxability 31 

Games,  taxability 18 

Glace  fruits,  taxability 22 

Golf  balls  and  clubs,  taxability 18' 

Government,  sales  to 10 

Graphophones  and  accessories,  taxability 17 

Guarantee  as  to  quality 5 

Gum,  taxability 19 

Hook-and-ladder  trucks,  taxability ! 11 

Hose  carts,  taxability m 11 

Humidors,  taxability 27 

Hunting  garments,  taxability 30 

"Importer,"  definition ' 2 

Inspection  of  books  of  persons  liable  to  tax U 40 

Island  possessions  of  United  States,  taxability  of  articles  sold  in  commerce 38 

Knives,  taxability 24 

Lens,  taxability - 20 

List  price  of  commodity  as  basis  of  tax 3 

Liveries,  taxability L 29 

Manufacturer: 

Definition 2 

Liability  for  tax 7 

Retailer 34 

Misrepresentation  of  tax,  penalty 52 

Motorcycles,  taxability 13 

Side  cars 13 

Musical  instruments,  taxability 17 

Organs,  taxability 17 

"Parts:" 

Automobiles,  taxability 14, 15 

Games  and  sporting  goods,  taxability ...........  18 


INDEX.  31 

Payment  of  tax 8,  37,  50,  51 

Penalties 40,  52 

Philippine  Islands,  sales  to 38 

"Piano  players:" 

Definition 17 

Taxability 17 

Pipes,  taxabilit  y 27 

Political  subdivision  of  State,  taxability  of  articles  sold  to 10 

Porto  Rico,  sales  to 38 

Possessions  of  United  States,  trade  with 3<:i 

Presumption  as  to  time  title  passes 9 

Price  of  commodity  sold  as  basis  of  tax 3 

"  Producer  "  definition 2 

Promulgation  of  regulations 53 

Rebate,  adjustment  of  tax  in  case  of 4 

Receivers,  liability  to  tax 8 

Records,  used  in  connection  with  musical  instrument,  talking  machine,  etc., 

taxability ]  7 

Refund  of  tax  on  rescission  of  sale 5 

Refunds  of  tax 41 

Repeal  of  former  taxes 35 

Rescission  of  sale,  effect 5 

Return: 

Manufacturer 37,  47 

Riding  habits,  taxability 30 

Sale  of  commodity  as  basis  of  tax 3, 9 

Sales  to  United  States  and  to  States 10 

Scope  of  tax,  automobiles 11 

Secondhand  automobiles,  taxability 11 

Side  cars  for  motor  cycles,  taxability „  13 

Slot  machines 28 

Smokers'  articles,  taxability 27 

Soaps,  taxability 33 

Speedometers,  taxability , 16 

Sporting  goods-;  and  games,  taxability 18 

State,  taxability  of  articles  sold  to 10 

Talking  machines,  taxability 17 

Tennis  balls  and  rackets,  taxability 18 

Thermos  bottles,  taxability 20 

Time  for  payment  of  tax , 37 

Rendering  returns 37 

When  tax  attaches !i 

Tires,  automobile 14 

Title,  passage  of 9 

Toilet  soaps,  taxability '■'<■'■ 

Toys,  taxability 18 

( !ameras,  taxability 20 

Tractors,  taxability 11 

Trailers,  taxability 16 

Transfer  of  burden  of  tax 44 

Virgin  Islands,  sales  to 38 

Wholesale,  manufacturer  selling  at  both  wholesale  and  retail 34 

Yachts,  taxability 32 

o 


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